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When and how should I pay tax on capital transfers?

One of the most discussed issues when buying property in Spain is the amount of taxes this process involves.

In general, regardless of the purpose for purchasing the property, one of the taxes to payable is the tax on capital transfers.

If you are an individual and are buying a second-hand housing you must pay this tax. In Andalusia, for example, generally this tax is set at 8%. In the diagram below you shall find a detailed scale of the transfer tax rate for this particular province:

Imposable base bracket Gross Tax Rest of imposable base bracket Transfer tax rate
0.00€ to 400,000.00€ 0.00€ 400,000.00€ 8%
400,000.01€ to 700,000.00 32,000.00€ 300,000.00€ 9%
700,000.01 and above 59,000.00€ and above 10%

Regarding the indirect taxation derived from the transfer of the property (VAT, Stamp Duties, Transfer Tax or Gift & Inheritance Tax), we would like to inform you that the value to be established in the Purchase Title Deed might be reviewed by the Spanish Tax Authorities (Autonomous Region).

According to the above, if you do not declare the “minimum value” according to the current scale approved by each town hall, the Tax Office may review this value and ask you to pay the difference on the transfer tax.

In such event, you would be able to confront the Tax Authorities´ decision in order to prove that the real value of the property is the one established in the deed.

It is very important that you receive a professional advice from a qualified lawyer during the purchasing process in order to avoid unexpected “surprises”. In this sense, please feel free to contact us if you are thinking on buying a property or if you have received a notification from the tax authorities related to this matter.

I’m buying a property. Is there a way to reduce tax payable?

From a fiscal point of view, there are several ways to reduce the tax burden when acquiring the property.

In this regard, we would like to recommend you to read our last month’s article which elaborates on the special ways to reduce these taxes.

At Lexland, our tax consultants are always happy to provide you with the necessary advice to solve any questions concerning these issues.